The proxy season now wrapping up sent a strong signal that investors expect companies to take climate change seriously.
Climate rose to the top of shareholders' agendas this season, in terms of both the number of shareholder resolutions and the rate of success.
This year, 10 climate-related shareholder proposals received majority support, compared with only three in 2020 and zero in 2019. There was an equally dramatic level of shareholder support for such proposals, averaging 52.6%, up from 38.5% the previous year, according to Institutional Shareholder Services' governance and research unit, which counted 24 such proposals this year, compared to 10 in 2020 and 12 in 2019.
Proposals seeking stronger disclosure of how a company's climate lobbying aligns with the Paris Agreement goals won majority support at Exxon Mobil Corp., Phillips 66 Co., Norfolk Southern Corp., United Airlines Inc. and Delta Air Lines Inc. Similar resolutions filed at CSX Corp., Duke Energy Corp., FirstEnergy Corp., Entergy Corp., General Motors Co. and Valero Energy Corp. were withdrawn when the companies agreed to disclose their climate lobbying activity.
A majority of Exxon Mobil shareholders also approved a proposal seeking disclosure of the climate change risks the company faces.
At Chevron Inc., 61% of shareholders backed a proposal calling for Scope 3 emissions reductions targets, while 48% voted to recommend that the company report on its climate-related financial risks.
While oil and gas companies were most often put in the spotlight to address cli- mate risks and how they will approach energy transition, other industries, including airlines and railroads, were not immune. Even Walmart Inc. got the message, through a resolution filed by Rhode Island Treasurer Seth Magaziner asking how it will reduce refrigerants that contribute to climate change. While the first climate-related refrigerant resolution won just 5.5% of the votes, it squeaks by the threshold for it to be considered next year.
"It has been a big year for climate," said Liz Gordon, executive director of corporate governance for the $254.8 billion New York State Common Retirement Fund, Albany.
"This proxy season saw a lot of movement. I think we are seeing real recognition by investors of the risk and opportunities. We are also seeing a growing response from companies who are also seeing the risk of not responding" to investors' concerns, Ms. Gordon said.
Just ask Exxon Mobil Corp.'s board directors. Frustration with the company's inaction addressing climate risk and energy transitions led New York State Common, the $469.8 billion California Public Employees' Retirement System, Sacramento, and $299.8 billion California State Teachers' Retirement System, West Sacramento, to back hedge fund firm Engine No. 1's winning bid to replace two of them with independent directors experienced in clear energy and energy transitions.